Price Improvement
Price improvement is an execution at a better price than the best quote at the time the order arrived — for example, buying at $50.01 when the best ask was $50.02.
Price improvement is when your order fills at a better price than the quote you saw — for example buying at $50.01 when the ask is $50.02. It is a chance, not a promise, and how it is reported differs by country.
- Category
- Market Structure
- Reading time
- 3 min
- Also called
- Better-than-quote execution
- Updated
Price improvement in plain words
Price improvement is the possibility — never a guarantee — of getting filled at a better price than the quote on screen.1
Brokers are expected to weigh that chance when deciding how to execute customer orders.1
But hunting for it takes time, and in a fast market the delay can leave you with a worse price than the quote.1
How to check for price improvement
Note the quote
Record bid and ask when you send the order.
Send the order
Your broker routes it.
Compare the fill
Improvement means filling at a better price than the quote.1
Multiply by shares
Improvement per share × shares = savings.
Beware speed
Remember that waiting for improvement can backfire when prices are moving quickly.1
Read reports
Compare venues using execution-quality reports such as those under SEC Rule 605, introduced in 2000.2
Worked examples
Example 1 — Buy improved
+4.00Hypothetical ask 50.02, fill 50.01, 400 shares.
| Saved | 0.01 × 400 = 4.00 |
The order filled at a better price than the quote — that's price improvement.1
Example 2 — Sell improved
+5.00Hypothetical bid 20.00, sell fill 20.005, 1,000 shares.
| Extra | 5.00 |
Selling above the bid is also price improvement — the opportunity, but not the guarantee.1
Example 3 — Fast market
−20.00Hypothetical ask 12.10, fill 12.14, 500 shares.
| Cost | 20.00 |
The delay in a fast market meant the fill came in worse than the quote.1
Price improvement vs slippage
| Aspect | Price improvement | Slippage |
|---|---|---|
| Direction | Better than quote | Worse than expected |
| Source | Routing, hidden liquidity | Speed, impact |
| Guaranteed | No | No |
| Measured by | Fill vs quote | Fill vs expected price |
Where price improvement matters
Broker choice
Comparing a Broker.
Costs
Offsets Trading Fees and Commissions.
Spreads
Better than the Bid-Ask Spread.
Execution
Counter to Slippage.
Advantages and disadvantages
Advantages
- Lowers real trading cost.
- Measurable fill by fill.
- Disclosed in execution-quality reports.
Disadvantages
- Not guaranteed.
- Often tiny per share.
- Can be offset by slower fills.
- Reporting differs by country.
Going deeper
Read as far as you need. Each level builds on the one before it.
Definition
Beginner
Improvement is possible, never guaranteed.1
Broker duty
Intermediate
US brokers must make a real effort to find the best market so the customer gets the most favourable price available at the time.3
Disclosure
Advanced
Rule 605 reports, required since 2000, let the public compare execution quality across exchanges, market makers and other venues.2
Common mistakes
Expecting it always
It is not guaranteed.
Ignoring the timestamp
Compare with the quote at order time.
Forgetting share count
Small per share, larger in total.
Ignoring fees
Net cost matters.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Price improvement is a fill better than the quote.
- It is not guaranteed.
- Savings = improvement × shares.
- Speed can work against you.
- Execution reports help compare brokers.
Frequently asked questions
Do limit orders get price improvement?
Where can I see it?
Is it the same outside the US?
Further learning
- Slippage
The opposite outcome.
- Bid-Ask Spread
The quote baseline.
- Broker
Routing choices.
- Market Maker
Who gives improvement.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- U.S. SEC (Investor.gov). Executing an Order (opens in a new tab) Checked .
- U.S. SEC. Fact Sheet: Disclosure of Order Execution Information (Rule 605) (opens in a new tab) Checked .
- FINRA. Rule 5310. Best Execution and Interpositioning (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.